Anniston Cleanups Wait as Companies Debate Liability

Monsanto, Pharmacia, Pfizer, Solutia

RACHEL MELCER / St. Louis Post-Dispatch 7feb04

[More on Monsanto]

First, one deadline passed. Then, another. An education foundation for the children of Anniston, Ala., went unfunded. A study of potentially contaminated soil in Sauget is delayed.

The wranglings of bankrupt chemical maker Solutia Inc. and its corporate cousins, Monsanto Co. and Pharmacia Corp., are affecting their ability to continue cleaning up after decades of environmental harm.

The companies say that work should continue. They are bound by civil settlements and agreements with the Environmental Protection Agency to study and repair the effects of a 100-year-old chemical business. Yet in the wake of Solutia's filing for bankruptcy reorganization in December, the companies can't agree on who should foot what bills.

The EPA worries that the longer they argue, more payments will be missed and further work could stall at more than 100 contaminated sites nationwide.

"We hope it doesn't come to a point where there's any delay in the work. And we'll take every action in our power to ensure that the work proceeds," said Richard Leahy, an attorney in EPA Region 4, which includes Alabama.

"All of these issues are roiling around in the bankruptcy courtroom in New York," he said.

The confusion is a result of the companies' tangled family tree.

The old Monsanto, founded a century ago, evolved into a chemical, pharmaceutical and agrochemical company. It made hazardous materials, including polychlorinated biphenyls, or PCBs, which later were banned as a suspected carcinogen. In an earlier age, the company followed standards of the day and dumped waste in ways that contaminated soil and water.

In 1997, the old Monsanto launched its chemical division as Solutia, giving it an estimated $3 billion in assets along with responsibility for environmental cleanups and litigation, plus health-care benefits for thousands of retirees. Solutia says these costs, totaling more than $100 million each year, drove it into bankruptcy. And it's trying to send them back to its former parent.

In 2000, the old Monsanto merged with Pharmacia & Upjohn Inc. to form Pharmacia Corp. A year later, the agrochemical and biotech seeds division spun off as the new Monsanto Co., and it promised to take on any of the legacy liabilities that Solutia failed or became unable to pay.

In April, Pharmacia Corp. was acquired by Pfizer Inc. and became a division of the pharmaceutical giant.

Solutia says that if it weren't for the terms of its spinoff, it never would have been responsible for the old Monsanto's mess. It is arguing in Bankruptcy Court that it should be held responsible only for environmental conditions that arose since its 1997 spinoff, at sites it owns and operates. Everything else should flow back to the source: Pharmacia and, through its indemnification agreement, the new Monsanto.

"We find it completely unacceptable to be given any liability for any historical or any off-site impact from historical Monsanto operations," said Alan Faust, Solutia's director of public affairs and environmental communication.

Solutia wants to shed work that has cost $25 million to $40 million a year, he said.

The companies and the EPA are talking, but nothing has been resolved, according to Faust and EPA representatives. Monsanto and Pharmacia objected in Bankruptcy Court, saying Solutia should not be allowed to discard spinoff liabilities while keeping the assets.

The process is mired. "What happens is that for as long as it slows down, we get closer to (cleanup) deadlines," Faust said. "We get closer to saying we've got to draw a line in the sand and ... not do this stuff anymore. So, the longer it takes, the more impatient people get."

Solutia is involved in cleanups at nearly 100 old dumps and industrial areas, once shared by unrelated companies. In these cases, it can bow out of the work, and others will continue, the EPA said.

The bulk of Solutia's costs and involvement is at two sites: one that touches Sauget and Cahokia, the other in Anniston.

In Anniston, the old Monsanto produced PCBs from 1929 to 1971; they spread into area rivers, creeks and soil.

Thousands of residents sued over property damage and health complaints, leading to a settlement last summer for $600 million in cash plus health-care benefits valued at $75 million. As part of the deal, Solutia - representing Pharmacia, which was also a named party - agreed with the EPA to conduct environmental tests and clean up any PCB contamination.

Solutia has cleaned more than a dozen residential properties. Others have yet to be accessed or identified.

And that's where the work has stalled.

On Jan. 31, a payment of $222,790 was due to an educational foundation established through the EPA consent decree with Solutia and Pharmacia. It is the second of 12 annual payments, totaling $3.2 million, to be used for special-education classes and tutoring for Anniston children who have learning disabilities, a suspected outcome of PCB exposure.

After warning the new Monsanto and Pharmacia, Solutia said it did not make the payment. Pharmacia responded with a court brief Feb. 2 saying it is "ready, willing and able" to make the payment if ordered to do so, but it doesn't believe Solutia should be able to shirk its responsibility.

Pharmacia is waiting for court action, said attorney William Baxley, who represents the company.

"We think Solutia has the money to make the payments, (and) they are obligated to do what they signed on to do," he said. But "we didn't want anyone to think we are reluctant to step up, if we are required to."

Other Anniston deadlines are looming. Solutia owes the EPA $1 million this month as partial repayment of $6 million the agency spent on cleanup activities, EPA attorney Leahy said.

On Friday, the EPA approved a plan for cleaning up Anniston residential properties where soil contains more than 1 part per million of PCBs. The work is expected to cost $3.3 million - though it could grow if additional homes are found with contamination - and is slated to begin next month.

The EPA also is waiting for Solutia to start sampling soil and water in a broader area of Anniston to find contamination and figure out how to treat it, a process that could take more than two years and lead to a much more extensive and costly cleanup.

The agency's consent decree is with Solutia and Pharmacia, and it doesn't care which company does the work, Leahy said. .

Any delays could subject them to fines of $750 to $5,000 a day.

Residents of Anniston, living for years with PCBs, have said they are eager to be rid of them. They worry that every day of continued exposure will take a toll on their health.

In Sauget and Cahokia, the EPA estimates that 143,000 people live within a four-mile radius of two sites, totaling hundreds of acres, contaminated with PCBs, hazardous chemicals and heavy metals. Companies, including the old Monsanto, dumped waste and contaminated water there from the 1930s to 1979. Pollutants spoiled Dead Creek and have spread to the Mississippi River.

"These are sites with a lot of visibility. It's two big projects. ... They definitely are a priority," said Nabil Fayoumi, remedial project manager with EPA Region 5, which oversees the projects.

At one area, 14 companies other than Solutia have signed on to a cleanup effort, so the work should proceed unhindered, Fayoumi said. Other projects are in danger of stalling.

Solutia had been paying to build an underground barrier that will prevent pollutants from reaching the Mississippi River. The work, at first estimated to cost $6.3 million but running behind schedule and likely over budget, is about 55 percent complete, Fayoumi said.

And Solutia has said it won't make further payments. It expects Pharmacia or Monsanto to do so, Faust said.

At the other contaminated area, a landfill designed to hold contaminated soil is incomplete. And a study of further environmental impacts is about a year from being done.

The EPA has contacted Monsanto and Pharmacia, along with other responsible companies, to demand payments, Fayoumi said. They have indicated that they are willing to take on the projects.

"We are working ... to make sure that if it is the case that Solutia cannot financially afford the work, then Monsanto has to step up or Pharmacia has to step up," Fayoumi said. "We have enforceable orders in place."

Reporter Rachel Melcer E-mail: rmelcer@post-dispatch.com Phone: 314-340-8394

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